Political Ping-Pong Pushes U.S. to Edge of Default

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Sept. 27 (Bloomberg) -- Bloomberg chief Washington correspondent Peter Cook and Greg Valliere, chief political strategist at Potomac Research Group, examine the increasing possibility of a government shutdown as the House and Senate move no closer to finding common ground on a spending agreement to avoid default. They speak on Bloomberg Television’s “Market Makers.”

Correspondent.

It is said to get started at 12:00 p.m. eastern time, where we expect for straight both.

The end result is what we expected all week, and that if senate democrats will pass a bill, a temporary spending bill that will remove the language defunding obamacare and sending it back to the house of representatives.

It gives john boehner a decision over the weekend.

It could happen as soon as 1:00 tomorrow afternoon.

The house will vote either considered a bill and pass it or make changes to the legislation and send it back to the senate and the ping-pong will continue as we take poster to the deadline of midnight monday night into tuesday morning.

That is when the government shutdown will kick in.

If they both happen to agree to the exact same legislation, stephanie -- if they do not agree to the exact same lesson= legislation, it could mean shutdown.

The was a note earlier saying they still think there could be a last-minute deal but the shutdown looks more likely than it did 24 hours ago.

What do you think is going to happen?

I still think late on monday night there is a chance they will do a very temporary extension, a week or so, or they might come up with a face-saving deal.

But, yes, you've got to say the last 24 hours have not been encouraging.

Basically, john boehner cannot control his radicals.

And they are making life really difficult for him.

Doesn't matter if the government shutdown?

Will it give them more or less leverage when it comes to the debt ceiling which republicans are really gearing up for?

That is the big fight.

You and peter and everybody now realizes that is what the markets really have to be scared about coming in mid october.

I think if this all falls apart and we have a government shutdown, it doesn't make things easier.

I think it would leave most people, including myself, to think that we could have a genuine crisis in mid october.

A genuine crisis for whom?

One would think the government shutdown would be a positive for someone.

Why would they let it happen?

They are dysfunctional, to give you one word.

I think that obviously the republicans are very unhinged over obamacare and they feel if they can't killing over the next -- can kill it over the next few days, it once it starts, they cannot extract it.

Then we move to the debt ceiling, a long laundry list that they would like to attach a -- whether the keystone pipeline or a promise of tax reform or, of course, more on obamacare.

This is the one where the white house said they will not negotiate.

So, the stakes are really pretty high.

." , to go through some of the demands that the republicans -- peter cook, to go through some of the demands that the republicans won, will the democrats agree to any of them?

It seems like their entire agenda the past few years.

All of those items being rejected by democrats in the past.

I talked to the number two democrat in the u.s. senate yesterday and he was your rating we would not accept those things.

We do not accept them before and we certainly would not accept them now.

They maintain the whole -- hartline with no negotiations over the debt ceiling and even over the cr.

I asked dick durbin about the one-year delay of obamacare, if that is what it takes to get rid of the crisis and move past and his answer, absolutely no deal.

50 million americans are uninsured.

They get sick, they go to the hospital.

Their bills are paid by the rest of us.

It is really unfair they don't have access to health insurance.

And it is unfair to the rest of us who have to pay their bills.

That is what health care reform is all about.

As far as john boehner's problems, they are self-imposed.

If he decided to be a leader for america instead of just the house republican caucus, we can get some things done around here.

The answer from democrats, no way to a one-year delay in obamacare.

Sara, what i am hearing is house republicans are coalescing around the idea of adding exactly that to the senate spending bill when it comes back over.

We're looking at the game of ping-pong where we know the end result already.

Democrats are going to reject what house republicans said that.

Do you feel this is just a reset of where we were new year's eve and that it could really impact our economy, but as it relates to global markets, and the positive?

New year's eve we all thought there would be eventually a deal on the fiscal cliff.

These two crises in the there are two negatives for the markets.

Number one, even a whisper of default is unnerving that -- because the u.s. is a safe haven.

You cannot say the chances are zero.

Number two, this type of uncertainty for weeks and weeks to come is a headwind for the overall economy.

It is the reason why this very fragile it -- recovery might level off because of the dysfunction in washington.

What do you think about the president strategy?

He said he will not negotiate over the debt ceiling.

He may be force.

He also lost a lot of political capital with syria him of the federal reserve chairman.

He draws a lot of lines in the sand and i think it may not be wise.

I think he may have to walk back to that promise he will not negotiate.

At some point, he will have to get involved.

Peter, you speak to more and more people in washington -- greg said even a whisper of default could be devastating.

Is there that whisper?

How we'll -- how real is it?

This time around, there really is this feeling that there isn't a clear exit pathway.

In the past, there have been.

Everyone saying when they come up to the line there will be some kind of a deal.

But it is not clear how john boehner is able to deliver the deal and at the same time hold onto his job.

Once again, the key player is john boehner.

Is he willing to avoid crisis and at the same time risk his own job and hold on the gavel?

That is the real question.

Think you so much.

This text has been automatically generated. It may not be 100% accurate.

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